Record profits for RM as group dismisses fears over budget cuts

RM suffered a blow in the summer when the Government announced plans to scale back or cancel unfinished Building Schools for the Future projects, including seven for which RM was the preferred bidder, worth 200m.

The amount of business it has signed up for the future has fallen by 8 per cent on a year earlier to 385m mainly as a result of the cutbacks, it said yesterday.

But RM, which provides IT and software services, such as interactive whiteboards and classroom technology, said funding for UK schools will show modest real-term growth over the next four years and it still sees significant opportunities for further growth in the UK.

It also plans to grow its overseas businesses, particularly in the US and Australia, with the aim of becoming a global leader in education solutions.

Sales increased by 10 per cent to 380.1m and adjusted operating profits rose 12 per cent to 19.9m in the year to September 30. The company also upped its dividend by 8 per cent.

Chief executive Terry Sweeney said the Oxfordshire-based company was approaching the coming year with confidence.

The accounts revealed that RM incurred 1.5m exceptional costs relating to the Government's decision to axe the BSF scheme.

However, during the year it completed computer installations in 56 BSF projects that were agreed or completed before the spending review and installed new networks in a further 750 schools.

The Government cancelled rebuilding projects in around 715 schools when it scrapped the 55bn scheme.

The programme had been "beset by massive overspends, tragic delays, botched construction projects and needless bureaucracy", it claimed.

It pledged to continue with 44 projects that had reached 'financial close', and review others on a case-by-case basis where preferred bidders had been appointed and stop all those remaining.

RM's results yesterday were slightly better than some analysts' expectations.

Will Wallis, at Numis Securities, retained his 'add' verdict but predicted that RM's profits will flatten after next year for two or three years.

He added that investor caution was understandable given the scale of the company's exposure to the public sector.